Deductions & credits

Since the amount of foreign capital gains and the foreign qualified dividends if any is greater than $19,999.00, the dividends have to be adjusted. The capital gains are adjusted by the worksheet and not co-mingled with the dividends.

Since the worksheet stated no adjustments to the cap. gains are needed, they are included in TT so as not to be adjusted.

The screenshot displays a demo of how to do this in the form 1116 worksheet in forms mode.

The 152k cap gains are inserted in g,1,a,.
2k of dividends inserted into g,1,c.

Only the 2k dividends are reduced. The cap gains and the reduced dividends end up in g,1, m and copied to form 1116, line 1a.